Logan Equipment Corp. v. Simon Aerials, Inc.

• Decision Date: 10 May 1990
• Docket Number: Civ. A. No. 87-156-WF.
• Citation: 736 F. Supp. 1188
• Parties: LOGAN EQUIPMENT CORP., Plaintiff, v. SIMON AERIALS, INC., Simon Engineering, P.L.C., Defendants.
• Court: U.S. District Court — District of Massachusetts

736 F. Supp. 1188

LOGAN EQUIPMENT CORP., Plaintiff, v. SIMON AERIALS, INC., Simon Engineering, P.L.C., Defendants.

Civ. A. No. 87-156-WF.

United States District Court, D. Massachusetts.

May 10, 1990.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

M. Robert Queler, Avratin, Okstein, Queler & White, Wellesley, Mass., for plaintiff.

Zachary Karol, Bingham, Dana & Gould, Boston, Mass., and Gregory G. Wille, Gibbs, Roper, Loots & Williams, Milwaukee, Wis., for defendants.

MEMORANDUM AND ORDER

WOLF, District Judge.

Plaintiff Logan Equipment Corp. ("Logan") brought this action on January 21, 1987 against defendant Simon Aerials, Inc. ("SAI"), a Wisconsin corporation, and Simon Engineering, P.L.C., its British parent (collectively "Simon"). Plaintiff charges breach of contract, breach of warranty, misrepresentation, negligence, interference with contractual relationships, and violation of M.G.L. c. 93A in connection with a contract for defendant SAI, an equipment manufacturer, to supply plaintiff, an equipment distributor, with eight specially-designed 80-foot boomlifts. Plaintiff seeks recovery for lost profits, loss of reputation and other consequential damages.

Defendants have moved for summary judgment on all counts of the complaint and on the issue of disregard of corporate form with respect to defendant Simon Engineering. Plaintiff seeks partial summary judgment on liability under the breach of contract and breach of warranty claims. Plaintiff has also moved for leave to amend its complaint to include a civil RICO claim and to extend discovery by 90 days to accommodate discovery on this claim. For the reasons stated below, the court grants defendants' motion for summary judgment on all counts and denies plaintiff's motions for partial summary judgment and to amend.

I. FACTS

Except where otherwise noted, the following facts are not in dispute. Sometime in mid-1984, Frank Rich, one of the principals of Logan Equipment Corp., became interested in procuring and marketing boomlifts with full-hydraulic control systems, in contrast to the electric-over-hydraulic controls which were the industry standard at the time. Rich learned that SAI had constructed three 42-foot full-hydraulic boomlifts for Ontario Hydro in Canada. Deposition of Frank Rich at 66-67 (July 17, 1987).¹

In June, 1984, Rich and one of Logan's engineers travelled to Toronto to inspect the Ontario Hydro boomlifts. F. Rich Dep. at 71-72. They were accompanied by George Rogers, an Ontario Hydro engineer, and Alistair Robertson, an SAI representative. They tested one of the lifts and were impressed with its operation. Id.

During the inspection, Rich was told that SAI had added some counterweight to the Ontario Hydro machines to ensure their stability and their compliance with Canadian industry safety standards. F. Rich Dep. at 118 (appended to Defendants' Supplemental Memorandum for Summary Judgment on Counts III and IV (hereinafter "Def.Supp.Mem.")). In fact, SAI had added 2,000 pounds of counterweight to each machine shortly after their delivery in 1982. Dep. of Albert Stephens at 107 (appended to Def.Supp.Mem.). The machines functioned safely and effectively following this modification. Id. at 106-07. Rich was also told that the units had been modified from SAI's basic model in several ways to satisfy Ontario Hydro's particular needs. F. Rich Dep. at 118 (appended to Def.Supp. Mem.).

During the visit, Rich spoke with Rogers and Robertson about the possibility of installing the full-hydraulic control system on an 80-foot boomlift, a substantially larger machine. Both men stated that they could see no problem with incorporating the full-hydraulic controls in SAI's standard 80-foot lift. F.Rich Dep. at 88-89, 124. Rogers stated that Ontario Hydro had been told by another equipment manufacturer that an 80-foot full-hydraulic boomlift could be constructed. Id. at 88. Rich later spoke by phone with Albert Stephens, another SAI employee, who also believed that the full-hydraulic controls could be incorporated in SAI's standard 80-foot unit, although he informed Rich that SAI had not previously done so. Stephens Dep. at 113 (appended to Def.Supp.Mem.).

Rich left Toronto feeling that SAI could provide him with a full-hydraulic 80-foot boomlift immediately. F.Rich Dep. at 124. Rich relied on the statements of Rogers and Robertson and on the apparent efficacy of the Ontario Hydro lifts in forming this belief. Rich, however, knew that a wide range of parameters could affect the design of a boomlift, such as the boom length, body weight, wheel base, and so forth. Id. at 107-12.

At that time, Rich was not aware that SAI had two standard 80-foot models, an unrestricted side-reach unit with extendable axles for increased stability (the "MPE-80") and a restricted side-reach unit with fixed axles (the "MP-80").² F. Rich Dep. at 123, 168-69 (appended to Def.Supp. Mem.). Rich had never seen the fixed-axle model. Id. at 123. He did not know the exact characteristics or technical specifications of either machine. Id. at 169-70, 197.

Logan's principals, Frank and Bryan Rich, met with SAI's representatives in September, 1984 at Logan's Shrewsbury, Massachusetts headquarters. The parties discussed the possibility of Logan becoming a Simon distributor and also talked about the 80-foot boomlifts on a general level. No formal distributorship agreement was ever executed. Dep. of Bryan Rich at 61-65 (Sept. 29, 1987).

On November 8, 1984, the parties met again at SAI's offices in Milwaukee, Wisconsin. At this meeting, the parties discussed specifications for two different full-hydraulic 80-foot boomlifts, one which Logan wanted to bid on a contract for the Philadelphia Navy Yard and one which it wanted for its everyday sale and rental business. B. Rich Dep. at 69-76. The Riches relied heavily on SAI's supposed design and engineering expertise in developing the specifications for these lifts. Id. at 71-76, 82 (appended to Logan's Further Memorandum Regarding Summary Judgment (hereinafter "Pl.Supp.Mem.")). The specifications did not conform exactly to either of SAI's standard 80-foot models, but, at least for the latter machines, were closer in nature to the fixed-axle unit. Id. Terry Smith, SAI's president, encouraged Logan to order a restricted side-reach machine, giving his "personal guarantee" that it would be "failproof" or "fool-proof" and that "nobody will have a problem with it." Id. at 76, 82. Smith made these comments when one of SAI's own employees expressed doubt about the feasibility of the project. Id. at 82-83.

Shortly after the November 8 meeting, Logan submitted a written purchase order for eight 80-foot full-hydraulic boomlifts incorporating the specifications agreed on in Milwaukee. F. Rich Dep. at Ex. 16. The order called for delivery of the first machines in January, 1985. SAI mailed to Logan eight separate acknowledgements of the order, dated December 4, 1984, each repeating the specifications and delivery dates on its face. F. Rich Dep. at Ex. 17. Each acknowledgement also bore the following legend in conspicuous type at the bottom center of its face:

THIS IS AN ACKNOWLEDGEMENT OF YOUR RECENT ORDER. PLEASE CHECK THE ABOVE INFORMATION CAREFULLY. IF ANY INFORMATION DEVIATES FROM ORIGINAL ORDER PLEASE NOTIFY US IMMEDIATELY!

THIS ORDER IS SUBJECT TO THE TERMS AND CONDITIONS PRINTED ON THE BACK HEREOF WHICH ARE AGREED TO AND MADE A PART OF THIS ORDER.

Included in the terms and conditions on the reverse, in small, but legible print, are the following:

17. Limited Warranty: The Company "Limited Warranty" undertakes that the Goods will be manufactured from good quality material and will be of sound design and workmanship, and it will make good by the supply of a replacement part, defects which under proper use appear in the Goods within a period of twelve (12) months from the date of delivery thereof and arise solely from faulty materials, workmanship or design (other than a design made, furnished or specified by the Buyer); provided always that defective parts have been promptly returned to the Company for the Company's inspection and final determination of its coverage under Warranty....

The Company's liability under this Condition shall be in lieu of any warranty or condition implied by law as to the quality or fitness for any particular purpose of the Goods, and save as provided in this Condition, the Company shall not be under any liability, whether in contract, tort or otherwise, in respect of defects in the Goods or for any injury, damage or loss resulting from such defects or from any work done in connection therewith.

20. Agents and Distributors: No person, firm or company acting as agent or distributor on behalf of the Company is authorized to make any representation or give any warranty or guarantee on behalf of the Company other than such as is contained in these Conditions.

21. Liabilities: The Company shall not be liable to the Buyer by way of indemnity or by reason of any breach of the Contract for loss of use (whether complete or partial) of the Goods or of profit or of any contract that may be suffered by the Buyer.

Logan did not protest any of these conditions. F. Rich Dep. at 237; B. Rich Dep. at 92-93.

Following receipt of SAI's acknowledgements, Logan proceeded to promote the sale and rental of the boomlifts, using what SAI claims was an unauthorized modification of SAI's specification sheet for its standard MP-80 model. Logan solicited a number of sales at a price of $161,000 per unit, and also solicited rental agreements at a rate of $7200 per month. F. Rich Dep. at Ex. 18-21.

The first boomlift was not delivered until February, 1985, one month after the delivery date specified for the first three machines. The lift evidenced certain design and safety problems, primarily because the safety switch restricting the boom's side-reach either malfunctioned or was never connected. Stephens Dep. at 171 (appended to Def....